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Risk Avoidance
Updated 07:50 AM EST, Fri October 23, 2020
Business Risk and Professional Liability Claims
The number and nature of these lawsuits are both surprising and alarming.
To avoid the exposure of professional liability claims, it’s important to make sure your company is protected with the right professional liability coverage.
Is Your Business at Risk?
If you have a service-related business, it’s a good idea to get professional liability insurance protection. Some businesses that can face lawsuits for errors and omissions include:
- Advertising agencies
- Software and application developers
- Technology service providers
- Management consultants
- Market researchers
- Printers
Liability Risk Management
We commonly think of claims related to physical things, such as:
- Defective products
- Slip-and-fall accidents
- Property damage
However, there’s also the risk of employee claims and auto accidents. Smart businesses take measures to minimize these business risks.
But business lawsuits may also come from alleged negligence or wrong doing. Purchasing liability insurance can help if you’re faced with a claim.
Professional liability is a risk unique to businesses that provide professional services or expert advice. That’s because these businesses can make mistakes or omissions that can result in a financial loss for their clients. For instance, an advertising agency could be held professionally liable if a logo they created caused their client to lose customers and sales.
Liability Risk Management Through Insurance
Many small business owners believe that the general liability insurance they have through their Business Owner’s Policy (BOP) covers any lawsuit. This isn’t the case. General liability only covers third-party claims of bodily injury and property damage. If a customer sues your business for making a mistake that caused them a financial loss, your general liability policy won’t help you.
For example, general liability insurance can help cover a customer’s slip-and-fall accident in your store. However, only professional liability insurance can help cover a client lawsuit for a glitch in your software product.
Professional liability claims can result in lawsuits for:
- Negligence
- Misrepresentation
- Inaccurate advice
- Breach of warranties or representations
- Failure to perform
The Cost of Professional Liability Claims
Professional liability lawsuits can cost thousands of dollars to defend a case that is dismissed, or they can cost millions in awards.
These claims also take away time you could be using to run your business. Be aware that some cases can take years to resolve. That’s why risk avoidance should be your number one priority.
Seek the Assistance of Risk Avoidance Professionals
Liability suits can be time-consuming and expensive, no matter the size or profitability of your business. We can help you assess your business’ risks and get you the right coverage. Our risk engineering team also has technical specialists who help businesses operate safely and efficiently. Get a small business insurance quote today and learn more about how we can help you and your business.